If you’re switching car insurance providers or are purchasing auto insurance for the first time, you might find that applying for insurance can be a complicated process. You will need to learn about your state’s minimum auto insurance requirements and compare different policies so that you can make the most informed decision.
Here are the top five frequently asked questions and answers about auto insurance:
#1: How long does it take for an auto insurance provider to pay the claim?
Answer: When you file a claim with an insurance company, the law requires the company to pay the claim in a reasonable amount of time. This can vary from claim to claim, and by situation. Some claims require extensive investigation and may involve interviewing witnesses, collecting evidence from the accident scene and inspecting the damaged vehicles. This can be a lengthy process, so it can take several weeks for the insurance company to send you the settlement amount.
#2: Why is auto insurance more expensive for teens and new drivers?
Answer: Most insurance companies consider teen drivers and new drivers “high risk” clients. This is because inexperience on the road can cause an accident and may cost the insurance company thousands of dollars in damages. Many insurance companies extend higher-than-average rates for teen drivers and those who have only had their driver’s license for a short period of time.
#3: Am I required to pay my insurance premium after my car is totaled in an accident and declared a loss?
Answer: All states require you to carry a minimum amount of auto insurance coverage if you own an automobile, even if you are not able to drive the vehicle. When the vehicle is declared a total loss, you will need to return your license plates to the Department of Motor Vehicles. When this has been completed, you will need to send the receipt to your insurance company and can then cancel your policy.
#4: Will I pay a penalty when I switch auto insurance companies before my policy expires?
Answer: When your auto insurance premium is about to expire, you will receive an invoice that lists your new rates and any applicable discounts if you decide to renew. You have a 30 day window to switch insurance companies at this stage, without incurring a penalty. If you make a change after you’ve already paid a premium, you may be subject to a penalty when you switch providers.
#5: What are the different types of car insurance coverage options available?
Answer: Almost all insurance companies offer several types of coverage options. Some are mandated by the state, and others are optional. The most common types of insurance coverage options available include bodily injury liability, property damage liability, Personal Injury Protection (PIP), collision coverage, comprehensive coverage and underinsured motorist coverage. Optional coverage options include rental car reimbursement, towing expense coverage and gap coverage.
“Frequently Asked Questions on Auto Insurance,” Office of Consumer Affairs and Business Regulation.
“Car Insurance Basics,” Insure.com.
“Frequently Asked Auto Insurance Questions,” Online Auto Insurance.